Title: Portfolio Manager, DWM Securities Inc.
Minimum assets: $250,000
Book size: $360 million and 1,200
We’re active managers. We use fixed income, ETFs, ETNs, individual securities and mutual funds with hard-to-duplicate strategies. We also use alternative strategies such as convertible-bond arbitrage and market-neutral hedge funds.
Our portfolios fall under six tiers on a defensive-to-aggressive continuum. Our defensive portfolios are almost 60% preferred shares and fixed income with an expected 4% rate of return. Aggressive portfolios are comprised mostly of equities and no fixed income, with an 8% rate of return.
It’s invested in a high-growth portfolio with a target return of 7%: 5% cash, 15% fixed income, 60% equities and 20% alternative strategies.
I’m also invested in oil-and-gas LPs via flow-through shares and developmental partnerships. I can deduct 100% of my FTS investment the first year. With the lower-risk developmental partnerships, I write off about 30% the first year. Also, I have a minimized UL policy. I’ve taken part of my children’s inheritance and parked it where it will never be taxed or subject to probate.
Last November, my partner and I embraced the fee-based discretionary model. It has revolutionized our business. Since the shift, we’ve moved between $60 million and $70 million of our book to our fee-based model. About 10% of that has come from new clients.
During prospect meetings, we present four plans. The first shows how their financial lives will unfold over the next five, 10 and 20 years, assuming they’d never met us. Then we present a tax-efficient version. The third adds ideas to preserve wealth and pass it to beneficiaries.
Last, we do a stress test and look at how a $3,000 monthly long-term care bill would impact household finances—often it means $200,000 to $500,000 less in their estates. That’s when we present a plan with CI and LTC insurance buffers.
Originally published in Advisor's Edge
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